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Strategy Video: Pound, Dollar, SPX - Pricing in Perfection?

Strategy Video: Pound, Dollar, SPX - Pricing in Perfection?

2014-07-08 01:08:00
John Kicklighter, Chief Currency Strategist
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Talking Points:

• 'Pricing in Perfection' is a term that looks to label over/under-valued markets rather than tops/bottoms

• True tops and bottoms seldom occur, but a trend can see its momentum fade if its premium is bloated

• We weigh the claims of 'pricing in perfection' for the S&P 500, British Pound and US Dollar

See volume behind the majors during the NFPs and ECB rate decision to gauge your trading approach using the free FXCM Real Volume and Transactions indicators.

'This market is pricing in perfection.' This is a label applied to an instrument or asset class that has exhausted the potential in an underlying fundamental or systemic theme. In practice, that means the market doesn't have to put in a top/bottom and reverse immediately. Rather, it reflects a limitation for extending an existing trend via its premium, and a substantially greater potential in a reversal - if and when it occurs. We discuss this phrase and fundamental assessment - with a review of the S&P 500, British Pound and US Dollar - in today's Strategy Video.

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